I think of myself a security technologist, and have been called a "security guru" by The Economist. I've written 12 books, of which my latest is the best-seller Liars and Outliers: Enabling the Trust Society Needs to Survive. I've also written hundreds of articles and essays, and many more academic papers. My free newsletter "Crypto-Gram" and my blog "Schneier on Security" are read by over 250,000 people. I've testified before Congress, am a frequent guest on television and radio, have served on several government technical committees, and am regularly quoted in the press. My current position is at BT as its Chief Security Technology Officer.

The Vulnerabilities Market and the Future of Security

Recently, there have been several articles about the new market in zero-day exploits: new and unpatched computer vulnerabilities. It’s not just software companies, who sometimes pay bounties to researchers who alert them of security vulnerabilities so they can fix them. And it’s not only criminal organizations, who pay for vulnerabilities they can exploit. Now there are governments, and companies who sell to governments, who buy vulnerabilities with the intent of keeping them secret so they can exploit them.

This market is larger than most people realize, and it’s becoming even larger. Forbes recently published a price list for zero-day exploits, along with the story of a hacker who received $250K from “a U.S. government contractor” (At first I didn’t believe the story or the price list, but I have been convinced that they both are true.) Forbes published a profile of a company called Vupen, whose business is selling zero-day exploits. Other companies doing this range from startups like Netragard and Endgame to large defense contractors like Northrop Grumman, General Dynamics, and Raytheon.

This is very different than in 2007, when researcher Charlie Millerwrote about his attempts to sell zero-day exploits; and a 2010 survey implied that there wasn’t much money in selling zero days. The market has matured substantially in the past few years.

This new market perturbs the economics of finding security vulnerabilities. And it does so to the detriment of us all.

I’ve long argued that the process of finding vulnerabilities in software system increases overall security. This is because the economics of vulnerability hunting favored disclosure. As long as the principal gain from finding a vulnerability was notoriety, publicly disclosing vulnerabilities was the only obvious path. In fact, it took years for our industry to move from a norm of full-disclosure — announcing the vulnerability publicly and damn the consequences — to something called “responsible disclosure”: giving the software vendor a head start in fixing the vulnerability. Changing economics is what made the change stick: instead of just hacker notoriety, a successful vulnerability finder could land some lucrative consulting gigs, and being a responsible security researcher helped. But regardless of the motivations, a disclosed vulnerability is one that — at least in most cases — is patched. And a patched vulnerability makes us all more secure.

This is why the new market for vulnerabilities is so dangerous; it results in vulnerabilities remaining secret and unpatched. That it’s even more lucrative than the public vulnerabilities market means that more hackers will choose this path. And unlike the previous reward of notoriety and consulting gigs, it gives software programmers within a company the incentive to deliberately create vulnerabilities in the products they’re working on — and then secretly sell them to some government agency.

No commercial vendors perform the level of code review that would be necessary to detect, and prove mal-intent for, this kind of sabotage.

Even more importantly, the new market for security vulnerabilities results in a variety of government agencies around the world that have a strong interest in those vulnerabilities remaining unpatched. These range from law-enforcement agencies (liketheFBI and the Germanpolice who are trying to build targeted Internet surveillance tools, to intelligence agencies like the NSA who are trying to build mass Internet surveillance tools, to military organizations who are trying to build cyber-weapons.

All of these agencies have long had to wrestle with the choice of whether to use newly discovered vulnerabilities to protect or to attack. Inside the NSA, this was traditionally known as the “equities issue,” and the debate was between the COMSEC (communications security) side of the NSA and the SIGINT (signals intelligence) side. If they found a flaw in a popular cryptographic algorithm, they could either use that knowledge to fix the algorithm and make everyone’s communications more secure, or they could exploit the flaw to eavesdrop on others — while at the same time allowing even the people they wanted to protect to remain vulnerable. This debate raged through the decades inside the NSA. From what I’ve heard, by 2000, the COMSEC side had largely won, but things flipped completely around after 9/11.

The whole point of disclosing security vulnerabilities is to put pressure on vendors to release more secure software. It’s not just that they patch the vulnerabilities that are made public — the fear of bad press makes them implement more secure software development processes. It’s another economic process; the cost of designing software securely in the first place is less than the cost of the bad press after a vulnerability is announced plus the cost of writing and deploying the patch. I’d be the first to admit that this isn’t perfect — there’s a lot of very poorly written software still out there — but it’s the best incentive we have.

We’ve always expected the NSA, and those like them, to keep the vulnerabilities they discover secret. We have been counting on the public community to find and publicize vulnerabilities, forcing vendors to fix them. With the rise of these new pressures to keep zero-day exploits secret, and to sell them for exploitation, there will be even less incentive on software vendors to ensure the security of their products.

As the incentive for hackers to keep their vulnerabilities secret grows, the incentive for vendors to build secure software shrinks. As a recent EFF essay put it, this is “security for the 1%.” And it makes the rest of us less safe.

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